GBP/USD analysis: Pound gives signs of life

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3347

Surprise recovery in May manufacturing PMI gave the GBP a needed boost.
UK Construction PMI on Monday could change back the picture if it confirms contraction in the sector.

The Pound was the best performer against the greenback on Friday, as it managed to reach a fresh weekly high of 1.3361. The GBP/USD pair finally closed at 1.3347, getting a boost from an upbeat UK May Markit manufacturing PMI as it came in at 54.4 from 53.9 in April. The index showed that manufacturing picked up speed for the first time in six months. News that a possible solution over the Northern Ireland border issue is being studied may have helped also, with headlines indicating that the country could be given a joint EU and UK status, and create a buffer zone on its border with the Irish Republic. The idea was attributed to Brexit Secretary David Davis, although there were no official words on it. At the beginning of the week, the UK will see the release of the May Construction PMI, expected at 49.7 from the previous 52.5. The recovery seems quite irrelevant in terms of pips and after the pair plunged pretty much straight from mid-April's high of 1.4375, yet at the same time, is the first relevant correction ever since, as in the daily chart, the RSI has left extreme oversold territory ever since, heading modestly higher around 35. In the same chat, the Momentum indicator remains directionless below its 100 level, while the price remains well below its 20 DMA, this last at around 1.3420. In the 4 hours chart, the pair advanced above its 20 SMA for the first time in over the month, with the indicator losing its bearish strength. The Momentum lacks directional strength but holds within positive territory, while the RSI aims north around 59, leaning the scale to the upside without confirming a bottom has been established.

Support levels: 1.3290 1.3245 1.3200

Resistance levels: 1.3375 1.3420 1.3460

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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